Private Client Frequently Asked Questions

Payment of your care fees, whether you are receiving that care in your own home, or in a care home, can be made either by you, your local authority, your health authority, members of your family or any combination of those. How this is decided depends upon the type of care you need, your financial means and the type of home you go into. It is highly advisable to plan in advance for the possibility of going into care. There will be ways in which you can arrange your finances beforehand, protect certain assets and put documents in place that will make the whole process so much easier to deal with.

At Onions & Davies, we are experienced in helping clients plan, sometimes many years in advance, advising them at the point of going into care and also representing them if they wish to challenge the assessment process. We are members of Solicitors For the Elderly, a national organisation of lawyers who specialise in and are experienced in this type of law. With the law in this area being very complicated and care costs averaging between £40,000 and £60,000 per year, it is essential to be properly advised and prepared.

When a person lacks the mental capacity to make decisions about their own affairs, a Deputy can be appointed by the Court of Protection to make such decisions on their behalf. This may be a friend, a relative or a professional person. In the past, these used to be known as Receivers.

It is generally preferable for a person’s affairs to be dealt with under the terms of an Enduring or Lasting Power of Attorney, but where a person has not made either of these, and does not have the mental capacity to be able to do so, an application for a Deputy to be appointed should be made.

The Court will set out the extent of a Deputy’s powers, which can apply to any area in which the person could have acted or made decisions if they had had the capacity to do so themselves. This may be in respect of financial matters, personal welfare issues, consent to medical treatment and social care interventions. The powers given will depend on the needs of the person whom the Deputy has been appointed to assist.

Decisions which Deputies commonly have to make can involve; buying and selling the person’s property, operating bank accounts and investing savings, paying for private medical treatment and care home fees, dealing with tax affairs, deciding where a person lives and whom they live with, day to day decisions such as what the person eats, wears, etc. and can also include dealing with the person’s medical records and treatment.

Deputies have a responsibility and a duty of care to act in the best interests of the person for whom they are making decisions. They must pay regard to the principles of the Mental Health Act and the related Code of Practice. Before making a decision, it is important for Deputies to consider whether the person they are assisting could make that decision for themselves with some support or under certain circumstances. They should involve the person who lacks capacity as much as possible in any act or decision and consider their values, views, beliefs, wishes and any feelings that they may have expressed in the past. If possible, the Deputy should consult with others such as the family and friends about their views on the person’s best interests.

Deputies are not expected to be experts in assessing capacity. However, when making a decision on behalf of someone else, they must reasonably believe that the person lacks the capacity required to make that decision themselves or to give consent at the time it was needed. Deputies are permitted to employ professionals such as solicitors, accountants and regulated financial advisers to assist them in carrying out their role as a Deputy. They are not permitted however to delegate their responsibilities to another person.

Deputies’ actions are supervised by the Office of the Public Guardian. Individual assessments will be made in each case, to determine the appropriate level of supervision and cases are reviewed regularly. The level of supervision will depend largely on the complexity and value of a person’s estate and the relationship between the Deputy and the person for whom they are acting. The Office of the Public Guardian will advise Deputies individually of what is required from them. This may include providing reports covering all decisions made on behalf of the person lacking capacity, along with receipts for money spent, bank statements and correspondence, letters and reports from health agencies or social services.

It is also possible that a Court of Protection Visitor may visit both the Deputy and the person whose affairs they are managing, in order to ensure that the Deputyship is working for both parties and that the decisions being made are in the best interests of that person. The Office of the Public Guardian may also contact others with an interest in the person’s welfare.

For someone to be appointed as a Deputy, they must submit a number of forms to the Court of Protection. The type of forms required will depend on what the Court is being asked to decide. They will generally ask for information in respect of both the individual who lacks mental capacity and the applicant, in particular with regard to their personal circumstances and finances. At Onions & Davies, we have many years’ experience of completing and submitting these forms and we will be able to give you advice if you are unsure about any parts of the forms. A number of people interested in the welfare of the person who lacks mental capacity will be notified of the application and they will be able to give the Court their views on the matter if they wish to do so. The Court will then assess the applicant’s suitability to act as Deputy and if the application is successful, they will issue an Order setting out the extent of the Deputy’s powers.

It is so easy to put off making a Will but it is the only mechanism open to you to ensure that your wishes as to the disposal of your property on your death are properly expressed and followed through.

If you die without making a Will, the law imposes its own rules (Intestacy) which could mean that relatives or others inherit in an unintended way. A Will enables you to put the person (or persons) of your choice in control of your affairs after your death. If you do not make a Will the person who ends up dealing with your estate could be unsuitable.

Not everyone pays Inheritance Tax. It is only due if your estate – including any assets held in trust and gifts made within seven years of death – is valued over the current Inheritance Tax threshold (£325,000 or up to £500,000 if you have a property in which you have lived that is being left to your descendants). IHT is payable at 40% on the amount over this threshold.

IHT planning is an important consideration, and we can advise you on the legal aspects of this. To ensure that you are properly advised financially, we will work alongside your existing adviser or introduce you to an adviser who specialises in this work, if you do not have your own.

If your interest is in limiting the amount of tax you and your beneficiaries will pay to the Government, it is important to utilise the legal and financial frameworks available to you to achieve this.

Yes. Your Executor has the responsibility for dealing with your estate in accordance with your Will. Your Executor has to comply with the formalities and will probably need to obtain a Grant of Probate from the Probate Registry. You may choose to have more than one Executor. Where your beneficiaries include children under 18 years or someone incapable of looking after their own affairs, you will need at least two Trustees. Executors and the Trustees are sometimes the same people.

You may appoint your husband or wife, or one of your children as Executors, as they should be someone you trust, someone you think would be capable of dealing with this kind of task. It would be a good idea to find out whether they would be willing to act. Someone appointed as Executor in a Will has the right to renounce that appointment if they do not wish to act. Remember, being an Executor does not stop that person benefiting under the Will.

The Directors of Onions & Davies are generally willing to accept appointment, either on their own account or jointly with a named person. We would make a charge for work carried out in our capacity as Executors, in the same way as we would if Executors asked us to act on their behalf. The advantages of having professional Executors are that you can be sure that they are independent, having no conflict of interests and also that they are legally accountable for the proper administration of your estate.

For parents of young children, it is perhaps even more vital to make a Will, as it allows an opportunity to appoint Guardians to act if your spouse/civil partner were to die before you do. If you do not have a Will, other family members may decide who takes on this role and this is not always satisfactory. The choice of Guardian, like any important decision, regarding your children’s welfare, should be made by you as the parents.

Appointing a Guardian is straightforward, but it must be done correctly. We will make a note of your wishes by including a special clause in your Will. You can, if you wish, include substitutes in case your first choice of Guardian is unable to act. You can also ensure that money is made available to meet your children’s financial needs as they grow up. If you would like to appoint Guardians, please discuss with them their willingness to be appointed.

If you are unmarried or not in a Civil Partnership, you cannot leave your property to your partner, unless you make a Will. Where the Intestacy rules apply, the surviving partner may have to go to Court to apply for a share of the estate. To be eligible, the surviving partner would have to be able to show some financial dependence on the deceased person and prove a closeness of relationship with him or her over a number of years.

In the eyes of the law, a couple who are living together have none of the automatic rights of a married or civil partnership couple when it comes to sorting out a deceased partner’s estate. For example, the legal beneficiaries may legally enforce the sale of the property occupied by the surviving partner.

We often see long-running family disputes surface in these circumstances, which can be tremendously difficult, traumatic and costly for the families and former partners and damaging to long term relationships, even after a resolution is achieved.

If you don’t have a Will, there are rules for deciding who inherits your assets, depending on your personal circumstances.

The beneficiaries will comprise only a surviving spouse (or civil partner) or people who are blood-related to you. Even a surviving spouse may not receive everything you leave – it depends on whether or not you leave children as well and also on the value of your estate.

It will take longer to sort out your affairs if you don’t have a Will. This could mean extra distress for your relatives and dependents until they can draw money from your estate.

There is a procedure whereby you can appoint someone to look after your affairs if you cannot do so yourself, for example as a result of Alzheimer’s disease or stroke or brain damage following an accident or because you become frail with advancing years. Very real problems can and do arise in sorting out the financial and property affairs of people in this situation. Making a Lasting Power of Attorney is an effective form of insurance that, if this situation should arise in your own life, there will be minimal complications and the person of your choice will be handling your affairs.

LPA’s can cover not only property and financial affairs but also health and welfare issues. It is often sensible to consider making an LPA at the same time as making a Will.

It also makes your Executors’ job easier and the administration of your estate less involved, if you have had attorneys helping with your finances before you die.

Not all gifts have their values added back into the estate; certain gifts are exempt.

Each individual is allowed to give away certain amounts every year, completely free of tax. These include £3,000 as a personal allowance, plus any number of gifts of £250 to different people, plus wedding gifts of £1,000, £2,500 or £5,000, depending on how you are related to the person getting married.

All gifts, of whatever value (on death or during your lifetime) to spouses, civil partners or charities are free of tax.

All gifts out of surplus income are also exempt. Making use of this is a very good way of reducing the eventual inheritance tax bill, but your executors will have to show that the income was surplus to your requirements after all expenditure has been paid.

Gifts can be made to individuals or to trusts, but they must be truly given away. If you try to reserve any present or future benefit in what you are giving away, HMRC will treat you as not having given it away at all.

Any gifts to charity or to surviving spouses or civil partners are free of tax. Also, every individual has their own nil rate band threshold. In addition, certain assets (business and farming assets for example) attract reliefs from tax. It does not make sense for assets or amounts that would not produce a tax bill to be given to beneficiaries who are tax-exempt beneficiaries. For example, if business assets are given to a surviving spouse, two tax reliefs apply and so one is wasted.

It would be better for assets that attract tax relief to be given to beneficiaries who do not. The correct wording in a Will can arrange this. However, you may want your spouse to inherit your business (for example) and so advice needs to be taken as to how you can arrange this whilst still making best use of all the tax reliefs available.

Gifts can be made to individuals or to trusts, but they must be truly given away. If you try to reserve any present or future benefit in what you are giving away, HMRC will treat you as not having given it away at all.

Prior to October 2007, it was common for spouses to leave an amount up to their nil rate band threshold to a trust. This was on the basis that it was wasting the nil rate band because of the spouse exemption.

The reason a trust was used was that if this amount was left to an individual, it might well leave the surviving spouse short of money. A trust could be used to keep the money out of the surviving spouse’s estate, whilst providing for him or her if needed.

After October 2007, there are a number of reasons, apart from tax saving, why trusts should be used.

• It can be useful to have the flexibility of a separate pot of money to provide for unforeseen circumstances
• Money in a discretionary trust is protected if the surviving spouse or civil partner goes into care
• You may not want your surviving spouse or civil partner to have all of your estate
• You may want someone to control that money, where you have divorcing, wayward or mentally incapable beneficiaries

In addition, trusts like these can still save inheritance tax. At the moment, it is highly likely that the growth over time in the value of the amount in the trust will be greater than the increase in the value of the nil rate band threshold. That growth would be outside the survivor’s estate and so would not be taxable on his or her death.